Did you know that the most common pay period in the U.S. is biweekly? It’s used by 37% of private companies.
Pay periods come with a record of your payment, which you must use when filing taxes or for loan applications. Keep reading, and we will guide you through understanding the difference between the payslip vs. pay stub.
Pay Stub
A pay stub is what your employer receives after you’ve been paid and is a more widely used term in the U.S. It is more common that it’s located digitally in your employee records instead of being mailed or sent directly to you.
Pay stubs include the below information:
- Employee deductions (health savings account, 401k, etc.)
- Employer contributions
- Income taxes
- Net pay
Living in a world of direct deposit and not directly being mailed your pay stub, it’s still important you know how to make sense of it. When filing taxes or applying for a loan or apartment, your pay stubs are vital financial records; you need to provide correct information for those forms.
Even though people have moved into digital pay stubs, you still have to make sure these get created for every employee to have a record of them. There are plenty of sample templates you can choose from to find the correct format for your company or you can go online and look for a paystub creator that is 100% authentic.
Payslip Information
A payslip is another form provided by your employer that shows what you earn before tax, with deductions, such as your 401k contributions and net pay. Payslip is a more commonly used term in the U.K.
A payslip is your proof of salary and should be a part of your record-keeping so you know where to pull from if you’re applying for an apartment, loan, or paying your taxes.
You may also see additional information on your payslip, such as:
- Hours you worked during that pay period
- Tax code
- National Insurance Number
- Pay rate (annual or hourly)
- Extra payments (overtime, bonuses, etc.)
You will want to know where you can pull your payslips from, whether it’s a third-party system your company uses or if you get physical copies. With new technology, almost everything is stored digitally.
Payslip vs. Pay Stub
Payslips and pay stubs are used for the same purpose, proof of payment. They are required when you’re paying taxes or applying for an apartment.
However, they vary in the information they provide. Some may provide additional details; it depends on your employer and the payroll system they have set up.
Also, “payslip” is a more commonly used term in the U.K., while “pay stub” is more widely used in the U.S.
Understanding Your Financial Documents
Now that you know the difference between a payslip vs. pay stub and how you can use each in important financial situations.
Both are proof of payment and contain your pre-tax and post-tax salary, along with other information from your pay period. However, other information can vary from your deductions or contributions to your tax code or National Insurance Number.